3 ms·

I think that this critique severely mischaracterizes the argument: we're not just talking about the merits of blindly consuming electricity ("leaving the lights

by bhupy 6y ago

I think that this critique severely mischaracterizes the argument: we're not just talking about the merits of blindly consuming electricity ("leaving the lights on forever"), we're talking about what happens when you attach a financial incentive to consuming electricity structured in such a way that your net profit increases if you spend less on that energy. For Bitcoin miners, the input is energy, and the output is money. This means that there is now possibly an incentive to make available cheaper sources of energy, and right now that happens to be wind and solar (at least per kWh). It's worth litigating whether such an incentive actually exists, or if it does exist whether it will actually stimulate green energy development, or whether cheap energy is always going to be clean energy. These are interesting debates. But it's impossible to talk about Bitcoin as long as we mischaracterize the arguments.

SamBam 6y ago
You have the supply-demand curve backwards. If there is more consumption of electricity, that raises the price, it doesn't make it cheaper. Of course the bitcoin miners would like to buy it cheaper. The power companies would like to make it more expensive. Economics dictates that their meeting point will be higher with more demand. You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant. But even if they did, the argument is still "If I use more electricity, and I/they create more green power plants to match my demand, the environment is better off." If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created!
- bhupy 6y ago
  > If there is more consumption of electricity, that raises the price, it doesn't make it cheaper. Of course the bitcoin miners would like to buy it cheaper. The power companies would like to make it more expensive. Economics dictates that their meeting point will be higher with more demand. First of all, economics dictates that supply will catch up to meet the demand as long as the barrier to entry is low. You'd be right if there was a cartel in green energy — but there's not. As long as supply is elastic, high prices are always transient. > You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant. No, I'm describing it as if BitCoin miners have the ability to set up ASICs powered by solar panels in the middle of a desert in Nevada. Somewhat high upfront cost, but effectively zero marginal cost of power. What's being stimulated here is the demand for accessible solar panels that can be quickly/cheaply installed. > If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created! But again, that presupposes that there's some fixed supply. Supply also changes, and it responds to demand. This is the core thesis behind Keynesian stimulus, and why inflation doesn't necessarily follow from stimulating demand. Now, baked into all of my points here is the assumption that the barrier to entry for new supply is low. It might not be! That's, I think, the more interesting question. The market conditions could also change making it easier and easier to spin up a solar farm, or spin up a wind-farm.
  - SamBam 6y ago
    > But again, that presupposes that there's some fixed supply. No, it doesn't! Exactly the opposite! Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels? Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating. So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat.
    - bhupy 6y ago
      > No, it doesn't! Exactly the opposite! How? > Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels? First of all, if a BitCoin miner can generate 1 TWh/year of their own electricity without burning fossil fuels, then the entire argument around Bitcoin electricity use is moot. Second of all, the only way a BitCoin miner can generate 1TWh/year of their own electricity is if they have access to the tools/infrastructure necessary to set up their own power generation — and the demand for that tooling/infrastructure stimulates the development and promulgation of it. > Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating. Again, because if you dust off your "economics" argument, when demand increases, cost increases. Then when cost increases, as long as supply is elastic, it increases to meet the demand. The demand for green energy, today, is increasing at a natural/slow pace, but if you have a financialized industry that demands high volumes of it, you supercharge the development of infrastructure on the supply side — enough that eventually the majority of electricity supply is green. > So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat. You really haven't explained how. Your entire argument presupposes fixed supply. Maybe that's true, but you'll then have to make the case for why the supply of green energy (or tooling/infrastructure) is fixed. As it stands, right now, there's a lot of money to be made selling solar panels. If industries mobilize to cheaply produce easy-to-deploy solar panels at scale, that is good for everyone.
    - 6y ago

by bhupy 6y ago

SamBam 6y ago

You have the supply-demand curve backwards. If there is more consumption of electricity, that raises the price, it doesn't make it cheaper. Of course the bitcoin miners would like to buy it cheaper. The power companies would like to make it more expensive. Economics dictates that their meeting point will be higher with more demand. You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant. But even if they did, the argument is still "If I use more electricity, and I/they create more green power plants to match my demand, the environment is better off." If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created!

bhupy 6y ago
> If there is more consumption of electricity, that raises the price, it doesn't make it cheaper. Of course the bitcoin miners would like to buy it cheaper. The power companies would like to make it more expensive. Economics dictates that their meeting point will be higher with more demand. First of all, economics dictates that supply will catch up to meet the demand as long as the barrier to entry is low. You'd be right if there was a cartel in green energy — but there's not. As long as supply is elastic, high prices are always transient. > You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant. No, I'm describing it as if BitCoin miners have the ability to set up ASICs powered by solar panels in the middle of a desert in Nevada. Somewhat high upfront cost, but effectively zero marginal cost of power. What's being stimulated here is the demand for accessible solar panels that can be quickly/cheaply installed. > If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created! But again, that presupposes that there's some fixed supply. Supply also changes, and it responds to demand. This is the core thesis behind Keynesian stimulus, and why inflation doesn't necessarily follow from stimulating demand. Now, baked into all of my points here is the assumption that the barrier to entry for new supply is low. It might not be! That's, I think, the more interesting question. The market conditions could also change making it easier and easier to spin up a solar farm, or spin up a wind-farm.
- SamBam 6y ago
  > But again, that presupposes that there's some fixed supply. No, it doesn't! Exactly the opposite! Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels? Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating. So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat.
  - bhupy 6y ago
    > No, it doesn't! Exactly the opposite! How? > Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels? First of all, if a BitCoin miner can generate 1 TWh/year of their own electricity without burning fossil fuels, then the entire argument around Bitcoin electricity use is moot. Second of all, the only way a BitCoin miner can generate 1TWh/year of their own electricity is if they have access to the tools/infrastructure necessary to set up their own power generation — and the demand for that tooling/infrastructure stimulates the development and promulgation of it. > Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating. Again, because if you dust off your "economics" argument, when demand increases, cost increases. Then when cost increases, as long as supply is elastic, it increases to meet the demand. The demand for green energy, today, is increasing at a natural/slow pace, but if you have a financialized industry that demands high volumes of it, you supercharge the development of infrastructure on the supply side — enough that eventually the majority of electricity supply is green. > So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat. You really haven't explained how. Your entire argument presupposes fixed supply. Maybe that's true, but you'll then have to make the case for why the supply of green energy (or tooling/infrastructure) is fixed. As it stands, right now, there's a lot of money to be made selling solar panels. If industries mobilize to cheaply produce easy-to-deploy solar panels at scale, that is good for everyone.
  - 6y ago